India looks to Burma to boost trade with south-east Asia

After years of isolation, India’s eastern neighbour is now seen as a link to new markets

Gateway … Manipur could provide a link for India to trade with the broader region. Photograph: AFP/Getty Images

The arch that spans Asian Highway Number One as it passes through the border town of Moreh proudly announces India‘s friendship with its neighbour, Burma. The official slogan proclaims that India is "Looking East" and promises that the road will deliver closer integration with south-east Asia’s fast-growing economies.

It is an idea fervently supported by Washington, which hopes tighter ties between Asia’s free-market democracies can help balance China’s rise. And it is gaining traction in the faraway capital of New Delhi, where attention has traditionally been much more focused on the security of India’s western border with Pakistan than trade via its eastern border with Burma. Now plans are afoot to correct that balance, and Moreh is on the agenda.

But distrust between the two neighbours has combined with Indian apathy and inefficiency to prevent the dream from becoming reality, at least so far. Here in Manipur state, 2,400km from New Delhi, the border feels more like an abandoned backwater than a potential metropolis. The narrow dirt streets that spread out from the main road in Moreh are patrolled by soldiers and stray dogs.

Legal trade that passes under the arch, from betel nuts to bicycle parts, is meagre and largely local. But elsewhere across this porous and mountainous border, there is a much larger flow of smuggled drugs and timber, militants and weapons. Police and army officers stationed here accuse Burmese officials of supporting Indian separatist groups by allowing them to use camps just across the border as bases to stage attacks on Indian soil.

Residents note that Moreh has been on the federal agenda before, to little effect. "They opened trade at Moreh in 1996, but the government didn’t make much effort to promote it," lamented Lanjingba Khundongba, who formed the Manipur Chamber of Foreign Trade and Industry in 2009, in the hope that his tiny hill state on India’s fringes could finally join in Asia’s economic boom.

"Let us be a part of this global economy. We can survive," he said.

Manipur is home to about 2 million people, and its sorry history illustrates the failure of the Indian government to turn rhetoric into reality. Its people look more Burmese than Indian and feel looked down upon and excluded by their countrymen. Its economy is dependent on transfers from the central government, much of which is allegedly stolen by local politicians and bureaucrats. A dizzying array of separatist groups has been fighting the state for decades, with varying degrees of support from neighbouring countries.

Trade with south-east Asia could be the lifeline Manipur needs. But in Moreh, there are no banks to provide letters of credit needed for foreign trade, no qualified customs clearing agents, no proper immigration facilities. Locals say the army is involved in smuggling and the government is corrupt.

In New Delhi, however, the mood is very different. After years of isolation, Burma’s opening to the world promises new opportunities for Indian business. Last year, Manmohan Singh made the first visit by an Indian prime minister to the country in 25 years, signing several agreements to strengthen diplomatic and trade ties.

A bus service is planned from the Manipuri capital, Imphal, to the Burmese city of Mandalay, and the Asian Highway is being upgraded all the way from Manipur through Myanmar to the Thai town of Mae Sot.

But Burma is perhaps more important as a gateway to the broader south-east Asian region. At the Indian commerce ministry, officials proudly point out that, thanks to a recently signed free-trade agreement, trade between India and countries of the Association of South-east Asian Nations grew by about 40%, to $80bn, in the fiscal year that ended last March and now represents about 10% of the country’s total overseas trade.

Plans to extend that trading bloc to take in countries including China and Australia under a broader regional framework are also advancing.

"Now we want to engage east, not just look east," said Siddharth, a joint secretary in the ministry of commerce and industry who only uses one name.

Almost none of that trade passes through Moreh, but officials say they hope that will soon change. An integrated customs and immigration checkpoint is due to be built, and immigration procedures might be relaxed to allow visitors to get visas at the border.

As evidence of the symbolic importance of this route, a car rally was staged from Indonesia to India at the end of last year, and it passed through Moreh. Siddharth said the event symbolises the opening of India’s north-east, and he expressed hope that the renaissance can bring economic and political benefits.

"It develops a stake for people to maintain peace," he said.

Still, given the slow speed at which the Indian government operates and the low priority that it traditionally gives to the north-east region, people in Imphal and Moreh are not holding their breath in anticipation.

"The government is very serious about trying to bring opportunity to the north-east, and it has many good policies,” said Khundongba, of the foreign trade chamber. "But when it comes to implementation, at every level people are very corrupt."

• This article appeared in the Guardian Weekly, which incorporates material from the Washington Post